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23, 2003 |
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With the popping of the e-commerce bubble, we don’t hear quite as much
as we once did about “available to promise” (ATP) and “capable
to deliver” (CTD), when it was really pushed by the supply chain planning
vendors like i2, Manugistics, Numetrix (now part of JD Edwards), and others.
Still, all the trends (higher velocity supply
chains, lower inventories, smaller shipments, etc.) require
more precision in order promising and actual delivery. SAP
finally delivered basic ATP capabilities in version 4.6c, and
other vendors are announcing new capabilities. While no one
really seems to be doing on-the-fly schedule changes based
on new orders as was once envisioned, we do seem to have increasing
use of quasi-real-time ATP.
Forgetting the technical aspects of achieving
ATP, it is a very valuable exercise to really analyze your
company’s order commitment model. Do you really know
how your company commits to customer deliveries today, and
how that stacks up to the competition?
I ask that question a lot, and find executives
and managers often don’t know the answer. Here are some
of the key variables to determine: do you provide an accurate
order promise or not (e.g. use a standard lead time)?; what
is the length of time to commit to shipment when an order is
placed or requested? (it’s often longer than you think);
is the promise based on shipment or delivery (much trickier)?,
what is the geographic scope of the capability (local, regional,
national, global)?. And of course, what percent of the time
do you deliver as promised?
Georgia-Pacific consumer products division, for
example, is doing some interesting integration between transportation
planning and SAP’s ATP function. Yet overall, I think
most companies still have a large way to go, especially as
more companies attempt to move to build-to-order models. But
of course the right place to start is with the customer’s
needs, and seeing how improving your commitment model and process
can provide competitive advantage.
Are we making real gains in order promising?
Give us your thoughts. Click
here. |
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full report >>
The most recent quarterly study by the Institute for Supply Management
and Forrester Research found for that for the first time, the percentage
of direct materials purchased by the survey group surpassed the
percentage of web-based indirect materials spend, though just barely.
The researchers surveyed 290 companies
and found that for Q2 2003, the group purchased 11.7%
of direct materials over the Internet, versus 11%
for indirect materials. As one would expect, the
respondents have more ambitious plans for web-based
procurement, though the process now appears evolutionary
not revolutionary, as we may have envisioned a few
years ago.
One of the problems with this type
of survey is that the “how” of the web-based
materials purchase is really the critically important
question. It also needs to look at other automated
methods, such as EDI. Perhaps most interestingly,
29% of manufacturers in the survey claimed they had
bought some direct materials via an Internet auction
in the quarter.
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full report >>
For years there have been concerns by some fringe groups that bar
codes were Big Brother in disguise. Anyone seen the image of the
man with the bar code tattooed on his forehead that used to show
up on windshield flyers?
Information Week reports that a privacy
group is pressing the California legislature to limit
use of RFID tags to supply chain and inventory applications,
and to de-activate all tags at Point of Sale.
This does bring up some interesting
questions. Retailers/manufacturers may want the tags
permanently attached for returns, warranty, and service
purposes. Do you as a consumer want that? There has
been talk about refrigerators telling Coke when you
run out of soda based on RFID tags… not sure
this is a good thing, even if it saves a few trips
to the store. RFID will move more slowly than many
think, but it will raise a series of issues we all
need to think about. Agree?
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The Federal Reserve reported last week that U.S. industrial production
rose a scant .1% in July, following much stronger gains in recent
months. Production was up strongly in technology sectors, and down
in metals and motor vehicles.
Perhaps most interesting, inventory levels continued
to fall, so that the inventory-to-sales ratio across
the economy stands at only 1.36, which Morgan Stanley
believes is an all-time low.
We seen wave after wave of supply chain technologies
promising to reduce inventories. Evidence is that
a combination of technology and process change (e.g.
lean production) have substantially lowered raw materials
and work-in-process inventories over the past decade,
but finished goods have been continuing to pile up.
But nervousness about customer demand obviously has
the ability to drive down inventory levels. The question
is weather these historical low inventory levels
are leading to stock-out and fill rate problems,
and if the relative shortness of inventory today
will drive more robust growth later in the year as
business gain confidence in the recovery.
Have we reached a point where we are we stretching
inventories too thin, or has the economic slump simply
exposed pockets of excess inventory? Give us your
thoughts.
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